NC

We rate NACCO INDUSTRIES INC (NC) as a Hold with a composite score of 52.9/100 at a current price of $56.05. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (71th percentile) and momentum (53th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (40th percentile) and quality (42th percentile) tempers our overall conviction. We assign a Narrow Moat rating (46/100), Low uncertainty, and Standard capital allocation.

Key items to watch: sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

NACCO INDUSTRIES INC holds a top-quartile position (#0 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 52.9/100 places it at rank #1550 in our full 7,333-stock universe. At $314M in market capitalization, NACCO INDUSTRIES INC is a small-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 46%, though momentum at the 53th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 12% (-30.8pp vs sector) narrow to operating margins of 13% (+0.9pp vs sector) and net margins of 13.7%, yielding a gross-to-net conversion rate of 111%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $56.05, NACCO INDUSTRIES INC is trading near fair value based on current fundamentals. Our value factor score of 51/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 11.2x (roughly in line with the sector median of 13.7x), EV/EBITDA of 12.2x (at a premium), P/B of 1.0x, P/S of 1.5x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to NACCO INDUSTRIES INC. The company exhibits strong financial stability with a beta of 0.77, and a stability factor in the 71th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 71th percentile with quality at the 42th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: above-average stability (71th percentile) suggests predictable business dynamics; a 2.28% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate NACCO INDUSTRIES INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 8.7%, and the balance sheet is managed within acceptable parameters (D/E: 50%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; NACCO INDUSTRIES INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 2.28% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, NACCO INDUSTRIES INC receives a Hold rating with a composite score of 52.9/100 (rank #1550 of 7,333). Our quantitative framework assigns a Narrow Moat (46/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 51/100.

Our analysis supports a neutral stance on NACCO INDUSTRIES INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.